Some businesses across the UK have recently begun receiving letters from HM Revenue & Customs warning that overdue tax debts may now be recovered directly from their bank or building society accounts.

These letters mark the first renewed use of HMRC’s Direct Recovery of Debts (DRD) powers. The process was paused during the COVID-19 pandemic but was reinstated earlier in 2025 and is currently operating in what HMRC describes as a “test and learn” phase. For now, it applies to a limited number of businesses, but it signals a clear shift in HMRC’s approach to debt collection.

Under DRD, HMRC can recover tax debts of £1,000 or more directly from eligible accounts, provided several strict conditions are met. The debt must be firmly established, all appeal windows must have closed, and HMRC must have made repeated attempts to contact the business without success.

Importantly, DRD is not intended to come without warning. Before any funds are taken, HMRC will carry out a face-to-face visit to confirm identity, explain the debt, and discuss alternatives, including the option of a Time to Pay arrangement.

For businesses that receive one of these letters or suspect they may be at risk, early action is key. Engaging with HMRC promptly and agreeing on a realistic payment plan can often prevent matters escalating to direct recovery.

If you’re concerned about outstanding tax liabilities, cash flow pressure, or communication from HMRC, now is the time to address it.

Talk to us about your business.